Amazon shares drop on holiday forecast
The retailer rolls out strong third-quarter numbers, but investors aren't pleased.
Executives cited higher costs, saying the company is investing in more fulfillment centers for the peak holiday shopping season, and will open two more in the next few weeks. Amazon has been improving its warehouses and distribution centers all year.
The company still managed to beat third-quarter estimates. Profit rose 16% to $231 million, or 51 cents a share. That's up from $199 million, or 45 cents a share, in the year-ago period. Analysts had been expecting 48 cents a share.
Revenue rose to $7.56 billion, a 39% increase from $5.45 billion in the year-ago quarter. Analysts had been expecting sales of $7.37 billion.
"Revenue increased 39 percent but operating income only grew 7 percent," said one analyst with BGC Partners, according to Reuters. "It's the opposite of what people want to see. People want to see more leverage coming out of the company."
For the crucial fourth quarter, Amazon's prediction for operating income took investors by surprise. The company said it anticipates a range of between $360 million and $560 million. Analysts had been expecting operating profit of $621.6 million.
Fourth-quarter sales were more in line with Wall Street. Amazon said it expected net sales at between $12 billion and $13.3 billion -- a 26% to 40% improvement over the fourth quarter of 2009. Analysts are expecting sales of $12.2 billion.
"Amazon's operating income forecast for the fourth quarter looks below the consensus even at the highest end of the guidance range," one analyst told Bloomberg. "It shows the margin pressure the company has been experiencing."
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
[BRIEFING.COM] The stock market ended the Thursday session on a mixed note ahead of Friday's nonfarm payrolls report for February (Briefing.com consensus 163K). The Dow Jones Industrial Average (+0.4%) and S&P 500 (+0.2%) posted modest gains while the Nasdaq Composite (-0.1%) lagged throughout the session.
Equities began the trading day on an upbeat note following comments from the Bank of England and the European Central Bank, both of which reaffirmed their commitment to ... More
More Market News
|There’s a problem getting this information right now. Please try again later.|
VIDEO ON MSN MONEY
MUST-SEE ON MSN
- Video: Easy DIY smoked meats at home
A charcuterie master shares his process for cold-smoking meat at home.
- Jetpacks about to go mainstream
- Weird things covered by home insurance
- Bing: 70 percent of adults report 'digital eye strain'